Cisco systems (CSCO) reported first-quarter financial earnings and revenues that exceeded consensus estimates. CSCO stock rose on Thursday as the computer networking giant also announced a restructuring plan.
The company reported earnings after the market closed on Wednesday. Cisco’s earnings for the quarter ended Oct. 29 rose 5% year-over-year to 86 cents a share, beating Wall Street’s target. The company said revenue increased 6% to $13.6 billion.
Analysts polled by FactSet estimated Cisco’s earnings at 84 cents a share on revenue of $13.31 billion.
For the current quarter ending in January, Cisco said it expects profit of 85 cents per share, in line with estimates. Cisco expected revenue growth of 5.5% in the middle of its guidance, above estimates for sales growth of 4%.
CSCO shares: Announcement of restructuring plan
In addition, Cisco announced a restructuring plan. The company said it will recognize pre-tax charges of about $600 million consisting of severance pay, one-time termination benefits, real estate-related fees and other costs. Cisco expects to recognize approximately $300 million in fees in the fiscal second quarter.
“Results were slightly better than expected, mainly due to lower backlog volumes and an environment that is holding up relatively well,” Bank of America analyst Tal Liani said in a report. “Gross margin is expected to improve and the company announced a restructuring. Revenue and earnings per share were over $300 million and 2 cents, respectively, and fiscal guidance for 2023 was almost lifted by a win factor in the first quarter.”
Cisco stock rose 3.1% to 45.79 in morning trade stock market today.
Heading to Cisco’s earnings report, the company has a relative strength rating of 42 out of the best possible 99, according to IBD stock check. CSCO stock is down 30% in 2022.
In addition, CSCO stock has shifted away from its core business of selling network switches and routers. Through acquisitions, Cisco aims to increase revenue from software and services.
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